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Managing Your Retirement Finances

Retirement is a journey, not a destination. It’s something you’re creating — and enjoying — with the decisions you make every day. 

Retirement planning doesn’t stop when you retire. Even if you’ve followed a plan to save for retirement, it’s equally important to have a plan that is designed to help meet your needs throughout your retirement. 

Your in-retirement plan should include your income plan – how you pay yourself in retirement – and your estate plan.

Generate income while making your money last

Whether you are already retired or still working, at this stage of your life your tolerance for risk has changed. You need to preserve the value of your retirement savings, yet grow them enough to both outpace inflation and to provide enough income to cover your living expenses. 

This can become a balancing act between drawing down your savings too quickly and being left with little to live on in your 80s or 90s, or the opposite scenario of spending your income too slowly and needlessly crimping your standard of living. 

How do you ensure you’re not taking on too much risk in the market versus too little risk to still grow your assets? 

One approach is to hold income-producing securities. You periodically withdraw the interest and dividends to live on. Immediate annuities, bond or CD ladders, and preferred stocks are typical income-oriented investments. Another approach involves maintaining primarily growth-oriented investments while periodically selling a portion of your appreciated stocks to generate cash. (Selling stocks could trigger taxes, so you should discuss this strategy with your tax advisor first.) Of course, you must be comfortable with the risk of each investment. 

It is important to have a plan that reflects both realistic expectations and your own comfort level. For an overview of what to withdraw, from where to withdraw it, and when to withdraw it, see our Retirement Income pages.

Withdrawal rates

Several factors can play an important role when calculating how much of your retirement savings you will spend each year, referred to as your withdrawal rate.

  1. First, consider your longevity, how long you think you may live. You must factor in the possibility of funding 30 or more years in retirement.
  2. Second, consider market conditions. Investment portfolio values fluctuate and can go down as well as up, based on market conditions and outside influences. If you experience a market downturn shortly after retirement, you may experience a reduction in portfolio value. If you take money out at a rate that is too high, it can seriously reduce your portfolio’s ability to recover when times improve.
  3. Finally, don’t overlook inflation. Not many of today’s investment portfolios generate 7 percent on a consistent basis. But what if your portfolio did grow 7 percent every year, and you took that 7 percent to live on? The number of dollars in your investment portfolio would remain flat over time, but your purchasing power would be eroded by inflation.

While you have little control over market volatility and inflation, you can help preserve your retirement security by wisely managing one factor that you can control: your withdrawal rate. By withdrawing your income at a conservative rate early in your retirement, you may dramatically prolong the life of your retirement savings – and you may even be able to raise your withdrawal rate later in retirement.

Consider your Required Minimum Distributions

Required minimum distributions (RMDs) generally begin by April 1 of the year following the year you turn 70 1/2 from your Traditional IRAs and from any former employer's retirement plan. This requirement needs to be factored into your income plan.


Properly managing your asset allocation and withdrawal strategy can get complicated. If you haven’t already, consider consolidating your retirement savings into a rollover account to ensure your investment strategy is coordinated and to help simplify the management of your portfolio and calculation of your required minimum distributions.

Please keep in mind that rolling over your assets to an IRA is just one of multiple options for your retirement plan. Each of the following options are different and may have distinct advantages and disadvantages.

1. Roll assets to an IRA

2. Leave assets in your former employer's plan, if plan allows

3. Move assets to your new/existing employer's plan, if plan allows

4. Cash out or take a lump sum distribution

Reconcile your budget and cash flow

Creating and following a realistic budget can be essential when you’re retired. It helps ensure your money lasts as long as you will need it.

  • Understand your basic needs – the essentials – and consider providing for these needs with predictable sources of income–such as Social Security, pensions and annuities.
  • Plan for discretionary expenses and how you will fund them.
  • Consider further building your emergency reserve fund to cover possible new expenses, particularly in the areas of healthcare and long-term care.
  • Compare your spending strategy to your income strategy – are they consistent with each other, or does your spending strategy need to be adjusted to align with your retirement income?

If you have been retired for a few years, now is a great time to give your income and spending plans a check-up.

Estate Planning

Design a plan that can protect you, your spouse, and your heirs no matter what life brings. The benefits of a sound estate plan include:

  • Ensuring that your assets pass to your beneficiaries in the simplest, most tax-efficient manner
  • Ensuring that your assets will be well managed in the event of your incapacitation or death
  • Preserving your assets for future generations

If estate taxes are likely to cut significantly into the amount you're able to leave your heirs or beneficiaries, now might be the time to consider the tax benefits associated with charitable giving strategies if you haven't already.

  • Think about charitable organizations that interest you, as well as gifting strategies for your heirs, such as contributing to a grandchild’s education savings account.
  • Consider naming younger beneficiaries on tax-advantaged retirement accounts you plan to pass on versus taxable accounts or life insurance policies.
  • Younger beneficiaries, like grandchildren, have the ability to extend the ongoing benefit of tax-deferred accumulation over their longer life expectancies by stretching out the inherited assets through an IRA.
  • Converting pre-tax retirement investments to a Roth IRA (and paying the taxes at the conversion) is another strategy to consider to pass assets tax-free to your heirs.
  • Insurance can also play an important role in your estate and retirement plans. To learn more, see ways insurance can help.

Successful estate planning involves a team of experts: an experienced Estate Planning Attorney, a Certified Public Accountant, and a financial advisor you trust to help manage your estate and preserve and protect your assets. Wells Fargo has helped manage the assets for generations of families. For more information, call us at 1-866-246-5056.

Mapping your route through retirement

As you enjoy this new phase of life, you need to make sure your retirement plan allows you to focus on the things that are most important to you. Wells Fargo can work with you to identify issues and risks, develop strategies to address gaps and help you refine and update your in-retirement plan. 

We are here to help you take the steps that are right for you throughout your retirement. To get started, contact a Wells Fargo Retirement Professional today.

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